I am the President of Let Voters Decide, a coalition that supports state tax reform and the protection of voters' rights at the ballot box. I am also a Missouri-based entrepreneur (and co-founder of Pelopidas, LLC) with almost two decades of state & local legislative lobbying experience across nearly one third of our fifty states. Over the last five years, my professional teams of advocates and I have been researching, improving, and suggesting changes to our state tax code systems to help create jobs.
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Governor Moonbeam's Tax-Hungry California Swings And Misses, Again

Tony Hsieh's $350 million startup effort, known as the Downtown Project, seeks to make Las Vegas the live/work/play and shipping capital of the world in less than five years. (Photo credit: Wikipedia)

Do Californians hear the giant sucking sound of successful entrepreneurs and workers abandoning Southern California and heading toward no-income tax states? It would seem not, if state tax policy is any indication. This week, Californians again voted to raise both sales and income taxes by supporting Proposition 30. Here’s a question: If so-called “temporary” taxes to fund education in California work so well, then why are job creators in Las Vegas so successful in luring others into their state?

Let’s take a look at Take-Two Interactive Software, Inc. (NASDAQ: TTWO). The company is a major publisher, developer, and distributor of video games such as Grand Theft Auto, the Civilization series, and the Borderland series. Take-Two is headquartered in lower Manhattan, but its studio locations are spread all over the world. This week, Take-Two announced that its wholly owned publishing label is working a deal to relocate one of its testing studios from Northridge, California to downtown Las Vegas, Nevada.

So, why the move to Vegas?

An entertainment innovator such as Take-Two, which reported nearly $500 million in net revenue in the first half of the year, is a great catch for a town on its way up like Las Vegas. Of course, the company is hoping to garner some local and state relocation incentives from its commitment to move an estimated 150 jobs into 25,000 square feet of vacant downtown office space for at least seven years.

But Take-Two is neither the first nor the last business to find Nevada more attractive than tax-hungry, tax-hiking California. Apple is building a data and purchasing center near Sparks and Reno, according to the same report. Perhaps such moves could fly under the radar without such bold, audacious plans from CEOs like Zappos’ Tony Hsieh. His $350 million startup effort, known as the Downtown Project, seeks to make Las Vegas the live/work/play and shipping capital of the world in less than five years.

Part of what may make Hsieh’s play for America’s entrepreneurial creative class compelling is the promise that job and culture creators who relocate to Nevada would be able to keep more of what they earn.

Nevada has no personal income tax – a radically different alternative to California tax rates that are retroactively applying a top marginal income tax rate of 13.3%. Between 1995 and 2010, the Las Vegas-Paradise, Nevada, metro area has pulled in $11.62 billion in net adjusted gross income from high tax places such as Los Angeles, according to data on income migration from the IRS.

Those who are reluctant to look over the state and federal fiscal cliffs might adopt the California Teachers’ Association mantra – that public education funding protections are the only way to build strong schools. So how does a chief executive like Tony Hsieh solve Las Vegas’ education pipeline needs? Apparently, he is applying another Zappos “wow through service” innovation by recruiting 1,000 Teach for America teachers. With any luck, the Downtown Project vision will have a private or charter school supported by a $50 million private fund.

The irony is that all this energy is building in Senator Harry Reid’s back yard, even as he argues for tax increases on the wealthy in Washington. If Tax Policy Center estimates are correct and the average federal tax rate on American households increases by five percent or more, then Californians would be wise to keep some of their disposable income by betting on Vegas in 2013.

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